Do you know your wealth is at risk?
By Guy Bartlett
As a fellow business owner and tax payer of multiple types of tax, I’m sure you’ve figured out that come next year the Treasury and HMRC are going to be looking under every rock into every nook and cranny they possibly can to extract taxes from us to start to pay back the mountain of borrowing they took out to fund the lockdowns and other provisions.
On 9 March 2015 the then Chancellor George Osborn paid of the debt that accrued for World War 1. According to Wikipedia, During World War II the Government was again forced to borrow heavily in order to finance the war and by the end of the conflict Britain’s debt exceeded 200 percent of GDP, as it had done after the end of the Napoleonic Wars! On 31 December 2006, Britain made a final payment of about $83m (£45.5m) and thereby discharged the last of its war loans from the US. A mere 97 and 61 years respectively to pay off those loans! If only you and I could get that long to borrow money eh?
A generation is considered to be 20-30 years at a time so by my calculations that’s around 3 generations whose taxes will be needed to pay off the debts accrued by the governments decisions in reacting to the emergence of Coronavirus. That’s my daughter’s grandchildren …
Now, governments of all political persuasions just cannot help themselves levying taxes. Income Tax was the first tax in British history to be levied directly on people’s earnings. It was introduced in 1799 by the then Prime Minister William Pitt the Younger, as a “temporary” measure to cover the cost of the Napoleonic Wars at a rate of 10%. If only it was now eh?
Capital Gains Tax was first introduced at a flat rate of 30% in 1965 – the year of my birth! Whilst there are several components, like a starting allowance like income tax and there is what used to be called “Entrepreneur’s Relief”, the general rate to work with has been 20% for some time.
The cunningly called Office for Tax Simplification has now written a report to the Chancellor Rishi Sunak (him with the magic money tree) that suggests that CGT should be increased considerably as one of the ways to start to claw back the huge debts run up in 2020. Here’s a link to a BBC article on the topic which makes quite scary reading https://www.bbc.co.uk/news/business-54908037
The office is run by a small group of civil servants, mainly from HMRC. That’s like putting the foxes in charge of the hen house!
Setting aside any moral arguments as to whether raising more tax to pay for money spent reacting to Coronavirus, the issue is that we – as business owners and hardworking entrepreneurs, the risk takers and wealth creators – are about to see more of our wealth reduced through changes to tax policy.
You’ve been in touch with us here are Fidelis Group in the past few months of 2020 and I’m sorry if we have ever been slow in getting back to you at any time. Like you, we’ve had a really busy time responding to the pandemic in our operating companies plus we’ve also been really busy building a new funding platform for investors looking to work with us in the much overlooked SME sector of the economy.
Let’s face it, it will be the likes of us that will pull the economy back into shape, not politicians or civil servants, right?
I feel very strongly and passionately about this topic so I’m holding a live webinar/workshop on Tuesday 8th December at 11am to discuss what’s coming and how you might protect yourself from the impact.
Please register your interest in this entirely FREE event here and we’ll send all the details you need, directly to your inbox. We will have expert advice and guidance on hand too so I hope you can join us to learn how you can protect your wealth in these uncertain times.
I can’t wait to see you then.
By Guy Bartlett, Co-founder of Fidelis Group
If you were thinking of selling your business you will definitely be poorer if you wait till after April 2021! We expect to very busy over the next four months and we have a network of expert buyers we can also link you into if it’s something you want to do. Just give us a call on 0161 410 7070